I feel like I should start this off by saying that anyone can start a restaurant, but not everyone can start a successful one; however it just isn’t true. Not simply anyone can start a restaurant because spoiler alert: it’s EXTREMELY difficult. Not only do you have to find the capital to start your own operation, but you have to find a team who believes in and supports your dream, implement solid financial systems into your operation, find the strength and perseverance to push through hard times, and you have to accept that your time is now slave to the devil in the details of operating a restaurant. So when we see people start restaurants, make it through the tough times, somehow find a functioning work/life balance and turn that restaurant into a success we do a little happy dance inside. Now let me make something clear here – I’m not turning this post into an episode of Scared Straight. If your dream is to open a restaurant or if you’ve already opened one and you want to reach for number two, by all means reach for the stars… but it’s absolutely necessary to be smart and tactical to make that dream flourish into a success, financially speaking.
There are countless ways you can become financially successful so long as you are willing to put in the blood, sweat and tears to get there. It’s hard work, and even when you’ve found financial success the work never stops… but that’s why you love this industry right? Put in the work and the rewards are far better than anything you’ve tasted. Although there are many, we’ve picked out our Top 5 Tools for Financial Success in Your Restaurant:
1. First on our list, and no surprise here is our BUDGET VS ACTUAL tool:
This enables you to see week over week how you’re performing against your goals. Since the Budget is your roadmap to success, you need to understand where you’re hitting the mark and where there are opportunities to improve within your 4 walls. Without this tool, it’s difficult to make adjustments for unforeseen circumstances and maintain consistent profitability. In addition, you’re more apt to run into a cash crunch situation due to lack of knowledge on when to make larger purchases as well as miscalculating tax payments.
2. The second tool we love to love is our WEEKLY PURCHASE JOURNAL:
This tool is a declining budget that has proven to be one of the best ways to keep your purchasing in line with your sales. Since revenues can vary on a week to week basis due to holidays, weather, local events, etc., so should your spending! Being able to identify areas of over or under spending daily and make adjustments to sales forecasts during the week will ultimately help with cost controls and cash flow. Example — why would you spend the same amount on food on a projected 50K sales week as a 25K sales week?
3. Third to make our list is our MENU ENGINEERING TOOL:
Having a solid Menu Engineering tool in place will allow you to identify the relationship between sales and profitability of each menu item. Often times, this is no easy task since most systems would require constant management to get the desired results. Let’s face it, the price of commodities change all of the time. Having the ability to see the impact this has on your plate costs while also knowing the quantity sold over time are a huge tool to make proactive decisions to correct shrinking margins and improve overall food cost.
4. Fourth up we have our REPORT CARD TOOL:
This tool enables restaurant owners/operators to interpret important POS information such as sales, labor, comps and voids in ways so that performance can be evaluated each day. Since we collect the raw data, we consolidate it into a centralized storage area where it is distributed using easy to understand reports and graphs. Also, having the ability to identify trends and analyze the data in order to assist all operators inside and out of the store, directly influences decisions that ultimately impact profitability.
5. Last but certainly not least, is our QUERY REPORTING TOOL:
Being able to track total spending over time is key for purchasing decisions. Even more helpful is the visibility for price changes each time a product is ordered. This allows you to keep your vendors honest as well highlighting when there may be an area of opportunity to search for better pricing. Having detailed usage reports can help determine if there is potential waste or theft within the four walls from week to week so issues can be addressed timely before more shrinkage occurs.